The Fiatocracy

Capitalism, communism, socialism and fascism are marketed, financed and modified by the invisible puppeteers who manipulate these -isms as tools for the furtherance of their control agenda as they see fit depending on time, place and circumstances. In the meantime the ignorant masses are divided by these -isms and in the process of clinging to them they are conquered through the use of force, propaganda, addictions, bribery, blackmail or debt.

If you have any doubt, then consider the hefty campaign contributions from certain industries to congressmen who go on to work for them after retirement. Read insightful pieces about how "think tanks" pay (bribe) academics for "independent" research and writings. Look at how many White House lynchpins become Goldman Sachs kingpins or vice-versa. Finally look at the depth, quality and diversity of opinion in news reporting. Everything of course is according to the letter of the law but not according to the Spirit of America.

All these activities need to be financed and if gold is demanded as payment there will be limits. If on the other hand the ignorant masses are happy to accept fiat money as representing value, there will be no end to their schemes. They will be as happy as the Indians who accepted trinkets for their land in centuries gone past. For all our modern day sophistication we are in reality even greater fools than they were.

In 1966 Greenspan wrote an essay titled Gold and Economic Freedom but somehow went on to practice voodoo economics as Chairman of the Federal Reserve. Now I wonder what convinced him to change his tune? Choose from the list above.

Like the Gods of Olympus who toy with the mortal hero or the lion which plays with an antelope before devouring it, so too the fiatocracy's puppeteers play with us until their control agenda is achieved.

So where does that leave society?

Over 40 million people in the USA are reliant on food stamps yet in July men in suits paid 600 million sterling pounds for 240,100 tonnes of cocoa beans. Let the plebeians eat cake.

137,698 men and women filed for bankruptcy last month in the USA whist the average taxable bonus on Wall Street rose to $123,850 in 2009. Let them eat more cake.

Men in suits and with degrees argue whether we are headed for deflation or hyperinflation without understanding that the unemployed are doomed under either scenario. Let them eat cake as well.

A bankrupt US Government can borrow money for 10 years at 2.95% whilst struggling businesses seeking small commercial and industrial loans of about $500,000 were paying 3.5% more than the federal funds rate back in May according to the Fed's own data. And that's IF they could get the loan.

Moreover, banks could hand over toxic assets to Messrs Bernanke and Geithner in exchange for low cost cash which they would re-invest with the Fed at a profit whilst people were stuck with their toxic mortgages and underwater homes. Moreover they are made to feel the full heat of foreclosure on the one hand whilst being teased with tortuous modification processes on the other.

Excluding the USA, California, the 7th largest economy in the world spends 45% more on prisons than on universities and to balance its budget for the fiscal year 2010-2011 it reportedly would have to free 168,000 prison inmates and permanently close 240 university and college campuses.

U.S. politicians rudely point the finger at China and have made threats against her for years in relation to currency manipulation, yet the greater currency manipulator of the two is the USA which has abused her reserve currency status to the point of bringing herself and the rest of the world to the edge of a vortex more devastating that the universe's Black Hole. Get ready for more philanthropic schemes by the Fed in the days and weeks ahead.

Warren Buffet and Bill Gates recently hosted a dinner for 40 billionaires worth a combined $230 billion and extracted pledges to donate at least 50 per cent of their wealth to good causes. This gesture (if it isn't riddled with tax free foundations for compounding wealth and merely providing bread and circuses for the restless mob) may well replicate the spirit with which the ancient Athenian aristocracy undertook communal obligations which today the state carries out with great inefficiency and even greater losses. This cake is being baked so let's wait. The worry nevertheless remains that this might be a transitory period during which the USA will be "ruled" by Corporations dressed as Foundations.

The examples go on and on and are far too numerous to mention. The danger lies in the perception (if not the fact) that the wealthy have been able to eat their cake as well as have it. The masses are being screwed by paper at every turn. Paper currencies that lose value daily, paper investments that shrivel and die and paper mortgages that bind them to seriously devalued houses and unbearable debt.

The ordinary man has few options. Those options are gold and silver and the reduction and/or the destruction of his debt either by paying it off or through bankruptcy.

There is still just enough freedom and a never ending stack of fiat currencies available to buy gold and silver, but not for long. Over abundant paper of every colour and nationality will eventually pursue stores of value with which to see out the economic winter ahead.

How will you get through winter? By buying the ultimate financial insurance of history or by burning worthless fiat paper in your fireplace? The date of this winter can be decades or just a few minutes away. Knowing the time and date is not relevant. Being prepared is relevant. If the great unravelling is to take place after we are gone, then even more reason why we should prepare our children.

The mythical King Midas was in fact the first producer of fiat. He was granted the wish of turning everything that he touched into gold. But when even food and drink turned to gold he begged for this ability to cease. The story is not just about greed, it is also about fiat currencies, because even gold in never ending quantities would be just as useless as a store of value as paper has become. The magic of course is that gold and silver never have and never will be abundant resources either through mining or alchemy.

The greater portion of humanity is still entranced by paper currencies at the cost of dulling its intellect and burning its future. Some things are hard to change. As a good friend keeps saying, "the sun does not set nor does it rise, for it is the earth that is moving." Well that may be true but try telling the whole world to give up the use of a totally mistaken expression let alone the totally destructive belief in fiat currencies.

The U.S. still has a small but increasingly smaller window of opportunity to recalibrate its vision which must be focused on its youth and not its enemies. It must focus on trickle up economics and new definitions for economic growth. It must miniaturize many of the unsustainable expectations of its citizenry whilst compensating through greater efficiency and quality. Greater productivity must lead to fewer working hours rather than more crass consumption and lesser marginal utility.

Thus the biggest lie that man has ever told, that paper is as good as if not better than gold, continues to haunt humanity's outcomes. Even the smallest truth however eventually wins out over the biggest lie. So too, the day will come once again when an ounce of gold will be worth far, far more, than a suitcase full of paper currency.

In the meantime, just get some gold and silver, place them with a safe repository and let time and human folly do the rest.

Cash may be king but it's not the real thing for its tail has a sting.

If fiat triumphs in the end, you can be sure that humanity has well and truly been defeated.

Sydney Australia

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